DBS buys Societe Generale’s Asian private banking business

People make transactions at DBS bank ATM machines in Singapore on March 17, 2014. Singapore’s DBS Bank said on March 17 it had agreed to buy the Asian private banking business of French lender Societe Generale in a deal worth 220 million USD, boosting its access to the region’s super rich. AFP

SINGAPORE – Singapore’s DBS Bank said Monday it had agreed to buy the Asian private banking business of French lender Societe Generale in a deal worth $220 million, boosting its access to the region’s super rich.

DBS said in a statement to the Singapore Exchange that the deal “will accelerate DBS’s ambition of becoming a leading wealth manager in Asia”.

The acquisition comes at a time of growing competition to manage the wealth of Asia’s growing ranks of millionaires and billionaires.

Under the agreement, DBS will buy Societe General’s Asian private banking operations in Singapore and Hong Kong and parts of its trust business.

“This transaction is in line with one of DBS’s strategic priorities to be a leading wealth manager in Asia and will significantly increase the scale of its wealth management business,” Singapore’s leading bank said.

“The transaction will also provide significant revenue synergies as Societe Generale Private Banking Asia clients will have access to DBS’s universal banking platform including retail, corporate and investment banking.”

Jean-Francois Mazaud, head of Societe Generale Private Banking, described DBS as “the most suitable choice”.

“The commercial partnership we intend to implement together will also represent a great opportunity for our private banking customers to fully benefit from the very best of the two banks in Europe and in Asia,” he said.

DBS’s clients will have access to Societe Generale Private Banking’s offerings in Europe, DBS said.

It said the deal would increase its high-net-worth assets under management by more than 20 percent.

“From a strategic perspective, this acquisition will propel DBS forward in its strategy to grow its regional financial services footprint and become a leading bank in the Asian wealth management industry, which is a very fast-growing segment of the global financial services industry,” said Rajiv Biswas, Asia Pacific chief economist at IHS Global Insight.

“The concentration of acquired assets in Singapore and Hong Kong is also positive in terms of the geographic distribution of assets under management, since Singapore and Hong Kong are the two leading international financial centres in Asia,” he told AFP.

Kenny Kan, market analyst at Phillip Futures in Singapore, said the deal marked a “strategic positioning” by DBS “in view of the growing need for wealth management in Asia with its ever-increasing millionaires”.

DBS chief executive Piyush Gupta said in an internal memo to staff it was time for the Singapore bank to accelerate its private banking business through an acquisition.

“As you know, Asia is growing in affluence, and minting more millionaires every day than anywhere else in the world,” he said in the memo, a copy of which was seen by AFP.

He said that in the 2013 financial year, DBS’s wealth franchise, including the private banking business, reported record income of Sg$924 million ($730 million).

The bank managed wealth assets totalling Sg$109 billion at the end of last year, he said.

Those of high-end clients came to Sg$69 billion, up from Sg$39 billion in 2010.

Calling the deal complementary, Gupta said Societe Generale Private Banking’s client base was largely focused on “ultra-high net worth” individuals, many of whom come from outside Southeast Asia.

DBS’s expertise is “predominantly in Asian investment products and deal flows”, he said.

Gupta said the deal should be completed by the end of the year following legal and regulatory approvals.

The deal comes as Asia leads the world in terms of wealth growth.

A Chinese publisher said last month that Asia experienced a billionaire boom in 2013, with more than 200 people from the continent seeing their net worth pass into 10 figures.

The Hurun Report’s global rich list said a total of 824 Asians were included among the 1,867 people named as dollar billionaires.

That was an increase of 216 on the previous year, accounting for just over half the overall rise of 414.

DBS shares were up 0.19 percent at Sg$15.76 as of the midday break. The Straits Times Index was up 0.24 percent.